Forecast for exponential smoothing forecast as follows: Ft = alpha. At-1 + ( 1 –
ID: 373499 • Letter: F
Question
Forecast for exponential smoothing forecast as follows:
Ft = alpha. At-1 + ( 1 – alpha) x Ft-1
Ft = forecast for period t
Ft-1 = forecast for period t-1
Alpha = Exponential smoothing constant
Accordingly . please find forecasted values for alpha = 0.3, alpha = 0.6 and alpha = 0.90
Year
Sales
Forecast ( alpha = 0.3)
Absolute deviation
Forecast ( alpha = 0.6)
Absolute deviation
Forecast ( alpha = 0.9)
Absolute deviation
2005
450
410.00
40.00
410.00
40.00
410.00
40.00
2006
455
422.00
33.00
434.00
21.00
446.00
9.00
2007
520
431.90
88.10
446.60
73.40
454.10
65.90
2008
566
458.33
107.67
490.64
75.36
513.41
52.59
2009
584
490.63
93.37
535.86
48.14
560.74
23.26
Sum:
362.14
257.90
190.75
Absolute deviation is Absolute difference( i.e.non negative value) between Sales and Forecasted value
Sum of absolute deviations for different values of alpha are presented in the table.
Accordingly,
Mean absolute Deviation ( MAD) for alpha 0.3 = 362.14 / 5 = 72.428
Mean absolute Deviation ( MAD) for alpha 0.60 = 257.90/5 = 51.58
Mean absolute deviation ( MAD ) for alpha 0.90 = 190.75/5 = 38.15
Year
Sales
Forecast ( alpha = 0.3)
Absolute deviation
Forecast ( alpha = 0.6)
Absolute deviation
Forecast ( alpha = 0.9)
Absolute deviation
2005
450
410.00
40.00
410.00
40.00
410.00
40.00
2006
455
422.00
33.00
434.00
21.00
446.00
9.00
2007
520
431.90
88.10
446.60
73.40
454.10
65.90
2008
566
458.33
107.67
490.64
75.36
513.41
52.59
2009
584
490.63
93.37
535.86
48.14
560.74
23.26
Sum:
362.14
257.90
190.75